NEW YORK — Wall Street stocks gained ground Wednesday as softening inflation data and a robust beginning of second-quarter earnings season put investors in a buying mood.
All three major stock indexes closed modestly higher despite weakness in semiconductors, with consumer-focused retail and travel/leisure clear outperformers.
The Dow Jones Industrial Average rose 150.91 points, or 0.29%, to 52,659.18, the S&P 500 climbed 28.83 points, or 0.38%, to 7,572.42, and the Nasdaq Composite jumped 162.22 points, or 0.62%, to 26,269.23.
PayPal surged 17.2% after sources told Reuters that Stripe and private equity firm Advent International jointly offered to acquire it for $60.50 per share — representing about a 28% premium to its Tuesday close.
A second day of solid bank earnings added momentum to an auspicious beginning to second-quarter reporting season.
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BlackRock and Morgan Stanley beat quarterly profit expectations. BlackRock shares advanced 6.6%, while Morgan Stanley ended the session up 0.4%.
Analysts currently expect second-quarter year-on-year S&P 500 earnings growth of 23.7%, according to the most recent data from LSEG.
Among the 11 major sectors in the S&P 500, communication services advanced the most, while utility stocks suffered the largest percentage drop.
The Labor Department's Producer Price Index report provided a second straight day of cooler-than-expected inflation data, even as newly confirmed Federal Reserve Chair Kevin Warsh appeared before the Senate Banking Committee in his second day of Congressional testimony.
Combined with Tuesday's CPI report, the PPI data suggests inflation took a step in the right direction last month though it remains elevated due to the U.S.-Israeli war on Iran. This eased near-term pressure on the central bank to raise its key interest rate.
"My fear going into this week was, we could get a hot CPI print, inflation above 3.8%, and we didn't get it; we got a cooler reading of 3.5%," said Lauren Cassidy, chief investment officer of Founders 100 ETF in Dallas. "So that allows the Federal Reserve to have the opportunity to keep rates flat or cut them later this year, which is good news for the market."
Still, this week's inflation data was focused on last month, when investors grew optimistic that negotiators were moving toward a peaceful resolution to the Middle East conflict. That optimism faded in recent days as the U.S. and Iran staged escalating airstrikes, vying for control over the Strait of Hormuz. That could result in renewed price pressures.
Fed board member Lisa Cook said she is "prepared to act" if inflation does not soon begin to slow.
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